- by Best Inc.
- November 30, 2020
Reverse logistics involves all the actions needed to transport the flow of materials backwards in the supply chain, from the consumer destination back to the point of origin, such as the manufacture or distribution center. This flow is an important part of order fulfillment as it is often required due to defective goods, order inaccuracies, unsold products, or buyer’s remorse. The returned materials can then be redistributed, disposed of, or recycled.
Reverse logistics consists of two primary components: returns management and remanufacturing/refurbishing. Read on to learn about each of these components and decide which would be suitable for your business.
People often use the terms reverse logistics and returns management interchangeably, but the latter is a subcategory of the former. Through gatekeeping and avoidance, returns management ensures that reverse logistics is kept optimally efficient.
Gatekeeping refers to the decision making involved in screening and limiting the number of materials that are permitted into the reverse flow of the supply chain. This is a crucial activity for cost management because it eliminates the costs for returning materials that should be rejected from returning or were returned to the incorrect place. A successful gatekeeping system is one that controls and reduces return rates without jeopardizing customer service. The point of entry is the best spot in the reverse flow to implement your gatekeeping process.
Avoidance refers to a process that works similarly to gatekeeping in that it is also best operated at the point of entry where returns happen. However, the goal of avoidance is to minimize the occurrence of returns by identifying possible reasons for returns and working to resolve those issues. Successful avoidance techniques that have proven to work with many businesses include the use of strategic promotional programs, user friendliness, and quality control.
Remanufacturing & Refurbishing
A large percentage of returns happen because of defects, damages or inaccuracies with the delivered product. These could have occurred at any point of the supply chain, such as in the manufacturing plant where the goods were produced with defects, or in the warehouse where the goods were damaged due to mishandling, or when the goods were in transit.
Depending on why the products are returned, remanufacturing and refurbishing activities will handle the returns in one of five categories:
- Cannibalization: Recovering reusable parts from old or used products for the purposes of facilitating other remanufacturing and refurbishing activities.
- Remanufacturing: Rebuilding the product by using new, repaired or reused components to meet original product specifications.
- Repair: Fixing damages to re-integrate the product back into the inventory for re-sale.
- Refurbishing: Improving outdated or old components of the returned product to meet new standards and specifications.
- Recycling: Reusing the materials from another product to create a new product.
When we think about supply chain management, what comes to mind is often in the direction of moving products from manufacturers to end-consumers. However, that is only one half of the story. Having an efficient reverse logistics system is an essential part of your comprehensive supply chain network. No matter which component of reverse logistics you need help in, Best Inc. will be able to meet your needs. Contact us today for quotes and find out how we can best serve your company.